Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements,and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%.124Project A-1,400700435280330Project B-1,400300370430780What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.%What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.%If the projects were independent, which project(s) would be accepted according to the MIRR method?-Select-If the projects were mutually exclusive, which project(s) would be accepted according to the MIRR method?|-Select-

MIRR or modified internal rate of return is internal rate of return computed by taking into account borrowing and reinvestment rate. Since in the problem only WACC (Weighted average cost of capital) is given, therefore borrowing and reinvestment rate shall be taken as rate of WACC. MIRR can be computed using MIRR function in excel. Project should be accepted if MIRR is greater than WACC.Since Project B has higher MIRR and greater than WACC, Project B shall be chosen.

Answered: 700 435 280 330 300 370 430 780 MIRR?…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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it says 14.44% is incorrect please provide correct solution
I think question 3 is not answered clearly. If Project A is rejected due to negative NPV, then all positive NPVs projects should be accepted. The answer is not clear. Please correct me if I am missing something. Question 3) If the firm uses the discounted-payback rule, will it accept any negative NPV projects? Will it turn down any positive NPV projects? How do you know? Your answer is: No Due to Project A's negative NPV, it cannot cover the initial investment within its useful life. Will it turn down any positive NPV projects? It will reject projects with positive NPVs but not those with negative NPVs. If all potential cash flows are taken into account but the project still doesn't reach the designated cutoff point, the NPV can still be positive.
What happens when "pet" projects do not have the requisite NPV or IRR? Do pet projects seem to be approved over other more viable projects? Why does this happen?
Which of the following were listed as potential Problems or Issues associated with Using a Rate of Return Approach to justifying single or multiple Mutually Exclusive projects? Note: This is a Multiple Answer question. Please select all of the following options you think are correct? O The ROR calculations are typically more complex than the PW, AW, or FW methods and frequently require the use of trial and error techniques. O You cannot rely on the best Mutually Exclusive project to have the highest ROR. O An incremental approach is required to reliably determine the best project when comparing multiple Mutually Exclusive projects with the ROR approach. O This method assumes that any net positive cash flows are reinvested at the ROR rate. If the ROR rate is substantially larger than MARR, this might not be a realistic assumption. OFor any sequence of Net Cash Flows with more than one sign chance over the life of the project there may be more than one ROR value that satisfies the Rate…
Which one of the following is not a part of Feasibility Analysis in relation to system development?Select one:a. Operational analysisb. Economic analysisc. Technical analysisd. Customer analysis

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700 435 280 330 300 370 430 780 MIRR? Do not round intermediate calculations. Round your answer to two decimal places. MIRR? Do not round intermediate calculations. Round your answer to two decimal places. independent, which project(s) would be accepted according to the MIRR method?